Sony Shuts More Plants in Japan, Toyota Extends Halts as Recession Looms
Sony Corp. (6758) shut five more plants and Toyota Motor Corp. (7203) extended production halts, 11 days after an earthquake and tsunami brought scores of Japanese factories to a standstill and threatened to spark a recession.
Sony, Japan’s biggest exporter of consumer electronics, suspended some work at five plants in the central and southern regions until March 31 because of trouble getting supplies after power outages, the Tokyo-based company said in a statement yesterday. Toyota, the world’s biggest carmaker, said yesterday all domestic car-assembly will be stopped until March 26, while Honda Motor Co. also extended closures.
The moves come as Morgan Stanley estimated that damage to the earthquake-stricken northeast, including disruptions to power and distribution systems, may cause the world’s third- largest economy to shrink in the second quarter at an annualized rate of 6 percent to 12 percent. A recession is “almost certain,” according to Mizuho Securities Co.
“Companies’ production and people’s consumption will be stuck in an abnormal state at least for the next six months,” said Naoki Iizuka, a senior economist at Mizuho Financial Group Inc. in Tokyo. “The electricity shortage will continue to hamper economic activity.”
The magnitude-9 earthquake, Japan’s strongest on record, and the ensuing tsunami killed at least 9,000 people and damaged more than 100,000 buildings. Engineers continued a battle to contain radiation leaks from the damaged Fukushima Dai-Ichi nuclear power plant, 135 miles north of Tokyo.
The effect of parts shortages rippled through the supply chain, halting work at factories outside the region struck by the earthquake. Canon Inc. (7751), the world’s largest camera maker, closed a factory in Nagasaki, about 680 miles from Fukushima, through tomorrow, also citing problems securing components.
Sony’s new closures increase its shuttered plants to 12 after the company halted operations at factories making products including Blu-ray discs and semiconductor lasers. The plants suspended yesterday make liquid-crystal display TVs, camcorders, cameras, mobile phones, headphones and broadcasting equipment, it said.
The electronics maker said it may shift some production overseas if the shortages of parts and materials persist.
“Further bottlenecks for components and disruption of operations at technology companies are expected in April and May,” said Eve Jung, an analyst at Nomura Holdings Inc. in Taipei. “There’s a risk that these companies may not be able to meet their second-quarter guidance.”
Sony is also pushing back employee recruitment by about two months to give opportunities to candidates dealing with the aftermath of the disaster, the company said in a statement yesterday. Sony had planned to begin the process next month.
Toyota said earlier the company and its subsidiaries would keep most of their plants shut until yesterday. The carmaker decided to extend the closures after checking the status of its suppliers, said Shiori Hashimoto, a spokeswoman for the Toyota City, Japan-based manufacturer. Toyota has lost production of 140,000 vehicles, with electronic parts, rubber and plastics in short supply, she said.
Honda, Japan’s third-largest carmaker, will keep three plants in Japan shuttered until at least March 27, it said yesterday in a faxed statement.
Fujitsu Ltd. (6702), Hino Motors Ltd. (7205), Hitachi Ltd. (6501), Isuzu Motors Ltd. (7202), Japan Tobacco Inc. (2914), Kikkoman Corp. (2801), Mitsubishi Motors Corp. (7211) and Panasonic Corp. (6752) said they haven’t decided when they will resume full production at factories shut by the disaster.
Toshiba Corp. (6502), which has halted work at two plants, said a factory making small liquid-crystal display panels may remain closed for about a month.
Some companies are reopening plants. Nissan Motor Co., Japan’s second-largest carmaker, said it was resuming operations at six factories yesterday and planning to restart some vehicle assembly tomorrow. Canon resumed partial output at three facilities in northern Japan even as it closed the Nagasaki factory. Denso Corp. (6902), the nation’s largest auto-parts maker, said all of its plants had reopened partially.
Sony resumed partial operations at a battery factory in Tochigi prefecture yesterday, the company’s third to restart operations since the earthquake.
Atul Goyal, a senior analyst at CLSA Asia-Pacific Markets in Singapore, said last week Sony’s operating profit for the 12 months ending March 31 may be 230 billion yen ($2.8 billion), or about 7 percent lower than he earlier estimated. He cut his forecast for the following year by 10 percent.
“For Toyota to resume production, the key would be to ensure a stable part supply,” said Satoru Takada, an analyst at TIW Inc. in Tokyo.
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